Funds at a real estate closing are paid almost entirely by wire transfer or cashier’s check, in the exact amount your lender lists on the Closing Disclosure delivered at least three business days before closing.1Consumer Financial Protection Bureau. TILA-RESPA Integrated Disclosure FAQs The settlement agent collects the money into an escrow account, verifies it has cleared, and then splits it among the seller, the seller’s mortgage lender, the real estate agents, the title company, and the county, usually within hours of signing.
Payment Methods Settlement Agents Accept
Only two payment methods are standard at a closing table: wire transfers and cashier’s checks. Settlement agents keep the list short because every dollar has to be verified and irrevocable before the deed can be recorded.
A wire transfer moves money electronically from your bank to the settlement agent’s escrow account through the Federal Reserve’s Fedwire system. Most banks charge roughly $25 to $35 for an outgoing domestic wire, though some online banks and brokerages charge nothing. A wire sent before your bank’s daily cutoff usually arrives the same business day, and the settlement agent can confirm receipt within hours.
A cashier’s check works differently. Your bank withdraws the funds from your account when it issues the check, so the check is backed by the bank rather than your personal balance. Fees at major banks typically run $8 to $15. You hand-deliver the check to the closing, and the settlement agent verifies it with the issuing bank before proceeding.
Personal checks, credit cards, and physical cash are not accepted. Personal checks can bounce, credit card payments can be reversed through chargebacks, and large cash payments trigger a mandatory IRS Form 8300 filing for any amount above $10,000.2Internal Revenue Service. Reference Guide on the IRS/FinCEN Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business Cryptocurrency is also off the table. The IRS treats digital assets as property rather than currency, and Fannie Mae prohibits virtual currency as earnest money.3Fannie Mae. Virtual Currency If you’re funding your purchase from crypto holdings, convert well in advance so the proceeds sit in a traditional bank account with a clear paper trail.
Same-Day ACH as a Possible Alternative
Some settlement agents will accept same-day ACH transfers, which carry a per-payment limit of $1 million.4Federal Reserve Services. Same Day ACH Resource Center ACH fees are generally lower than wire fees, but processing is slower and acceptance varies. Confirm directly with your settlement agent before assuming this option is available.
Knowing the Exact Amount to Bring
Your Closing Disclosure is the authoritative source for how much you owe. It’s a five-page form your lender must deliver at least three business days before the scheduled closing under 12 CFR ยง 1026.19(f).1Consumer Financial Protection Bureau. TILA-RESPA Integrated Disclosure FAQs If the annual percentage rate becomes inaccurate, a different loan product is substituted, or a prepayment penalty is added after delivery, the lender must send a corrected disclosure and the three-day clock resets.
The “cash to close” line on your Closing Disclosure combines your down payment, loan origination fees, title insurance, prepaid homeowner’s insurance, and prorated property taxes. Property taxes are split between you and the seller based on the day of year the sale closes. Any earnest money deposit you already paid is credited against the total.5Fannie Mae. Earnest Money Deposit
One line that often surprises buyers is the escrow cushion. If your lender requires an escrow account for taxes and insurance, federal law lets the servicer hold a cushion of up to one-sixth of the estimated total annual escrow payments on top of the initial deposits.6eCFR. Part 1024 Real Estate Settlement Procedures Act (Regulation X) – Subpart B If your annual tax and insurance bills total $6,000, the cushion can be as high as $1,000, and that sum is baked into your cash to close.
Sending the Funds Without Missing a Deadline
Most closings that stumble on payment stumble on timing. A missed bank cutoff or a mistyped routing number can push your closing to the next day.
Wire Transfer Timing
Fedwire itself processes transfers from 9:00 PM Eastern Time the prior evening through 7:00 PM Eastern Time on business days.7Federal Reserve. Expansion of Fedwire Funds Service and National Settlement Service Operating Hours Your bank’s internal cutoff is almost always much earlier in the day, and wires initiated after that cutoff won’t move until the next morning. Call your bank the day before closing and get the exact deadline.
You can initiate the wire online through your bank’s authenticated portal or in person at a branch. Either way, you’ll need the settlement agent’s bank name, routing number, account number, and a reference or file number. Triple-check every digit. Your bank will give you a federal reference number once the wire is sent; pass that along to the settlement agent so they can watch for the funds on their end.
Cashier’s Check Preparation
Request a cashier’s check from your bank at least a day before closing. The check must be made payable to the settlement agent or title company for the exact amount on your Closing Disclosure. A check for the wrong amount cannot be accepted, and you’ll be scrambling for a replacement or a last-minute wire. The settlement agent will verify the check’s authenticity with the issuing bank at the closing table.
Protecting Your Wire from Fraud
Wire fraud targeting real estate buyers is one of the most common and most damaging scams in the industry. Criminals compromise email accounts belonging to real estate agents, lenders, or title companies and send buyers fake wiring instructions that look almost identical to the real ones. Once the money lands in the criminal’s account, recovery is difficult.
Before sending a dime, call the settlement agent at a phone number you located independently, not one pulled from an email, and verbally confirm every detail of the wiring instructions: bank name, routing number, account number, and reference number. Treat any last-minute change to wiring instructions as suspect, especially one that pressures you to hurry. Title companies and lenders rarely change their banking details mid-transaction.
If you suspect your wire went to the wrong place, act within hours. Contact your bank immediately and ask for a wire recall. Notify the settlement agent and the receiving bank. File a report with the FBI’s Internet Crime Complaint Center and your local police. Funds reported in the first 24 to 48 hours have a much better chance of recovery than those caught later.
What Happens to the Money After It Arrives
Once your funds clear and all documents are signed, the settlement agent follows the Closing Disclosure line by line to pay everyone owed from the transaction.
The single largest outgoing payment is usually the payoff on the seller’s existing mortgage, wired directly to the seller’s lender to release the lien. Whatever remains after that payoff is the seller’s net proceeds, delivered to the seller by wire or check.
Real estate commissions also come out of closing funds. Historically, the seller paid a combined commission of 5% to 6% split between the listing agent and the buyer’s agent. Since August 2024, following a major industry settlement, sellers are no longer required to offer compensation to the buyer’s agent through the MLS. Buyer’s agent fees are now negotiated separately, so confirm before closing day whether any portion of your agent’s commission is coming from you.
The remaining disbursements include:
- Recording fees paid to the county to officially record the deed and mortgage. Rates vary significantly by jurisdiction.
- State or local transfer taxes imposed on the change of ownership. Not every state charges them, and rates range widely.
- Title insurance premiums paid to the title company for owner’s and lender’s policies.
- Attorney fees, in states that require an attorney at closing.
- Prorated property taxes, HOA dues, and utility costs split between buyer and seller based on the closing date.
Dry Funding vs. Wet Funding States
Not every closing disburses funds the same day you sign. About nine states, including California, Arizona, and Washington, follow “dry funding” rules: you sign documents at closing, but funds aren’t released to the seller until all paperwork is reviewed and approved, sometimes a day or two later. Every other state uses “wet funding,” where the seller is paid on closing day or within two business days. In a dry-funding state, the delay is a built-in review period rather than a sign that something has gone wrong.
If the Seller Is a Foreign Person
One situation shifts a payment obligation onto you as the buyer. Under the Foreign Investment in Real Property Tax Act, if the seller is a foreign person or entity, you are the withholding agent, and the default rate is 15% of the total sale price remitted to the IRS rather than to the seller. On a $400,000 purchase, that’s $60,000. The rate drops to 10% when the price exceeds $300,000 but does not exceed $1,000,000 and you intend to use the home as your residence. No withholding is required if you’re buying the property as your personal residence and the price is $300,000 or less.8Office of the Law Revision Counsel. 26 U.S. Code 1445 – Withholding of Tax on Dispositions of United States Real Property Interests
The settlement agent handles the mechanics, but the legal obligation rests on you. If the withholding is mishandled, the IRS can pursue you for the full amount plus penalties. Ask your title company or attorney directly whether the seller is a non-U.S. person if you have any reason to think so.